Data key to marketing moves

OPINION: Businesses risk being left behind by rapid changes in customer behaviour unless they improve how they collect and communicate information. 

In the same week as Transperth stumbled into a skirmish over privacy for collecting details on passenger journeys, the retail head of Facebook warned that Australian businesses were failing to keep up with their customers.

Transperth hasn’t done itself any favours by keeping its data harvesting work a secret, but if Facebook’s Martin Barthel is to be believed, the public transport authority’s strategy to better understand its customers is the right approach.

Transperth’s approach may be a bit more ‘wiretap’ than it needs to be, but at least it’s trying to improve its service by gathering meaningful data (that is more than I can say for the half dozen store cards and loyalty programs I’m part of). So few loyalty programs actually reward customers for repeat business that the concept is virtually redundant.

Mr Barthel believes many Australian businesses need to radically shift how they invest in communicating their products and services in order to survive.

What’s most interesting about the Facebook research, which is produced by a company that harvests a vast amount of data about its users, is that it shows 90 per cent of purchases still occur in-store.

The vast majority of us still buy everything from hardware to high heels in a shop. What has radically changed, however, is how we reach that decision to purchase.

The research capability of mobile phones is well understood and documented, but the link between targeting product promotion through social media and sales is less well understood.

Some retail analysts credit online browsing with the slow death of traditional shopping malls, as more and more consumers treat shopping centres as click-and-collect centres.

While shoppers once browsed three or four stores before making a purchase, potentially making other incidental purchases along the way, the path is far more direct after considerable online research, which is hurting retailers as well as retail landlords.

Experienced retailer and former David Jones boss Mark McInnes warned this month that retail landlords had to ‘right size’ rents to recognise the difficulties facing the apparel sector.

He claimed properties being abandoned by failed brands such as Marcs and David Lawrence could not possibly be put back on the market at the same price.

It is difficult to say whether Mr McInnes’s warnings will have any effect on retail rents, especially in the hot property markets on the east coast. But amid concerns over how the residential market will respond to the major banks’ recent interest rate rises, there are rumblings over retail property as well.

Sales growth at both the major department store chains slowed in the vital first half, which captures Christmas and the Boxing Day clearance sales, and now there’s talk of a fresh takeover bid for Myer.

And the consistent message from all quarters of business is that growth, if it’s there, is harder to earn. Everyone is working harder to achieve the same growth from even just a year ago.

Mr Barthel’s assessment of Australian retail is relatively blunt; he claims many businesses need to radically adjust their marketing approach, use data to map customer behaviour, and adapt to the role of mobile technology in purchasing.

Mr Barthel points out the power of the mobile phone – those millions of little screens being browsed every day for everything from news to shoes.

He says Facebook research suggests mobile phones are the new shop window for many organisations.

An online ‘story’ or an advertisement dressed up as news is highly effective in putting a product front of mind, and Facebook claims this leads to a greater number of sales.

It’s a byproduct of the echo chamber that is social media. But there’s money to be made if companies can understand how to use it and run that fine line between producing click bait and promoting their product.

Companies have to accept how powerful phones are in decision making; that’s the Facebook message.

Your company doesn’t necessarily need a sophisticated website (and forget about pop-up adds); what you need is data on your customers and a mobile-first strategy.

Which brings us back to Transperth and its digital mapping of your every public transport trip.

The execution may have been ham-fisted, but at least the data available is being used to get a better understanding of its customers.

Who knows, it just might lead to a better service; and we could all do with a bit of that, no matter where we are in our journey.